The Balance Sheet of Mini Company Was as Follows Immediately

question 42

Multiple Choice

The balance sheet of Mini Company was as follows immediately before it was acquired by Maxi Company: Mini Company Statement of Financial P osition January 1, 20X0 $$\begin{array} { | l | r | } \hline \text { Cash } & \$ 90,000 \\\hline \text { Accounts receivable (net) } & 50,000 \\\hline \text { Inventory } & 150,000 \\\hline \text { Plant and equipment (net) } & 100,000 \\\hline \text { Total assets } & \$ 390,000 \\\hline & \\\hline \text { Accounts payable } & \$ 40,000 \\\hline \text { Notes payable } & 80,000 \\\hline \text { Common stock } & 155,000 \\\hline \text { Retained earnings } & \underline { 115,000 } \\\hline \text { Total Liabilities and Stockholders' Equity } & \$ 390,000 \\\hline\end{array}$$ On January 1, 20X0, Maxi Company paid $350,000 in cash for 100% of the outstanding common stock of Mini Company. The current market value of Mini Company's plant and equipment was $140,000 on the date of acquisition. If the market value and book value are the same for Mini's remaining assets, what was the amount of goodwill purchased by Maxi Company?

• A) $20,000
• B) $40,000
• C) $50,000
• D) $60,000

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